National Company Law Tribunal sanctioned the merger scheme on September 25.Post October 1, IDFC financial holdings limited and IDFC limited will stand dissolved without being wound-up.
In July last year, IDFC First Bank and IDFC Ltd had approved a merger ratio of 155:100. The share exchange ratio fixed was at 155 shares of IDFC First Bank for every 100 shares held in IDFC.
“There will be no change in the Directors or management of IDFC FIRST Bank pursuant to the amalgamation,” IDFC Ltd said in an exchange filing.As per RBIs licensing rules as a promoter, IDFC was required to hold a minimum of 40% equity in the Bank for five years till September 30, 2020. Since then IDFC Ltd got an in-principle approval from RBI to merge IDFC and its holding company with the bank.
The company said that post the merger there will be a simplified corporate structure at the bank with no holding company.
As part of the merger, about Rs 600 crores of cash and cash equivalents will flow to IDfC First Bank.
IDFC First Bank will issue nearly 2,47,99,75,876 new equity shares to the shareholders of IDFC Limited as per the agreed swap ratio.
“Due to losses posted by the bank in its early years largely due to legacy infrastructure and corporate loan accounts and due to write-off of goodwill due to prior transactions, the Bank had accumulated losses,” IDFC First Bank said in an exchange filing. “This was restricting the Bank in its ability to pay dividends to shareholders. Such accumulated losses will be set off against the Securities premium Account of the Bank as part of the merger scheme. This would now enable the Bank to explore opportunities to pay dividend in future.”
With a simplified shareholding and corporate structure, and strong capabilities and brand built at the Bank, and a complete range of services of a Universal Bank, the Bank is well placed to grow with the enormous opportunities India offers, it said.